Giving within the law / Firms eyeing S.F. work fund mayoral bids

Published 4:00 am, Friday, December 19, 2003

SUPERVISORS3-C-16JANO1-MN-EL
San Francisco Supervisor Jake McGoldrick at City Hall BY ERIC LUSE/THE CHRONICLE

SUPERVISORS3-C-16JANO1-MN-EL
San Francisco Supervisor Jake McGoldrick at City Hall BY ERIC LUSE/THE CHRONICLE

Photo: ERIC LUSE

Image 2 of 2

elexnewsom0002_mk.jpg San Francisco mayoral candidate, Gavin Newsom was out campaigning on election day at the Glenn Park BART station. 11/3/03 in San Francisco. MIKE KEPKA/The San Francisco Chronicle Gavin Newsom is ready to take on the challenges facing the city. less

elexnewsom0002_mk.jpg San Francisco mayoral candidate, Gavin Newsom was out campaigning on election day at the Glenn Park BART station. 11/3/03 in San Francisco. MIKE KEPKA/The San Francisco Chronicle Gavin ... more

Photo: MIKE KEPKA

Giving within the law / Firms eyeing S.F. work fund mayoral bids

1 / 2

Back to Gallery

Political causes of San Francisco Mayor Willie Brown and Mayor-elect Gavin Newsom took in thousands of dollars in campaign contributions from people employed by two companies competing for a controversial $258 million airport construction contract, public records show.

The donations skirted a city ban on campaign contributions from anyone seeking city contracts because they were made by people who work for the would- be contractors rather than from the firms themselves.

But the money -- a combined $14,500 in donations since 2002 -- reflects what critics of the Brown administration view as a "pay-to-play" dynamic that came to be associated with the outgoing mayor's rule over the last eight years.

Latest news videos

"It's what ... Quentin Kopp called 'systematic corruption,' " said Supervisor Jake McGoldrick, referring to the conservative former supervisor, state senator and now San Mateo County superior Court judge.

Thought the contributions are legal, McGoldrick added, "it does lead to perceptions of corrupt government."

On Tuesday, the Board of Supervisors voted 6-4 to reject the award of the construction contract -- for a new cargo terminal at SFO -- to a team led by Airis Development Group Inc., in part because of suspicion the bid review process was influenced unduly by politics. Supervisor Newsom, who was elected the city's next mayor on Dec. 9, did not vote.

The Airis team included Brown's longtime friend and political ally the late former Atlanta Mayor Maynard Jackson, who died in June.

Michael Farrah, a City Hall aide to Newsom, said the supervisor had missed the meeting to work on his mayoral transition. A source familiar with Newsom's position said the supervisor would have voted against the contract had his colleagues on the board agreed to postpone the decision for a week until the next board meeting.

The deal was awarded in October by the Airport Commission, a five member body appointed by the mayor to oversee San Francisco International Airport, against the advice of SFO Director John Martin and despite Airis' finishing second in the scoring of an airport evaluation panel.

The firm that was ranked first and recommended by Martin -- but passed over by the commission -- was AMB Property Corp. of San Francisco.

Records show that both Airis and AMB made campaign contributions in 2002 and 2003, primarily to political causes of Brown and Newsom, whom Brown first appointed to the board and endorsed to succeed him when he terms out of office on Jan. 8.

In 2003, Justin Factor of Houston, the son of Airis President Ronald Factor and a developer for the firm, contributed the maximum $750 to the Newsom for Mayor campaign -- $500 for the Nov. 4 general election and $250 for the Dec. 9 runoff, according to campaign finance disclosures filed with the city's Ethics Commission.

Justin's brother, Canaan Factor, also of Houston, gave the $250 maximum for the runoff, the records show.

San Francisco lawyer Oliver Holmes, who is the legal agent for the Airis' subsidiary set-up to bid for the contract, contributed $500 to Newsom for Mayor in 2002 and, earlier that year, $1,000 to Newsom's Care Not Cash homeless policy measure, the records show. The $500 and $250 contribution limits on the campaigns for mayor and other local elective offices don't apply to ballot measures such as Care Not Cash.

In 2003, 14 AMB executives and employees contributed a combined $3,950 to Newsom's mayoral campaign, according to the records. That same year, AMB's Luis Belmonte gave $1,500 to Newsom's Care Not Cash campaign account.

In 2002, AMB executives and employees donated $5,000 to Newsom's Care Not Cash campaign, $1,000 to Newsom's supervisor and mayor campaigns and $300 to the Brown- and Newsom-endorsed campaign of Bevan Dufty for supervisor. Dufty was elected in December of that year. Doris Ward, the incumbent assessor who was backed by Brown for re-election, received $250. She lost her race.

Over the past two years, the reports show, people who work for AMB gave an additional $1,250 to candidates in other races that were unrelated and who also did not win the seats they sought. No other elected officials received donations from these sources during the bidding and review process.

The contributions from individuals with direct ties to the two companies took place despite a voter approved law intended to eliminate the appearance of influence-buying at City Hall.

Passed in 1995, the ordinance states, "No person who contracts with the City and County of San Francisco ... whenever such transaction would require approval by a City elected officer ... shall make any contribution to such an officer ... or committee controlled by such officer ... at any time from the commencement of negotiations for such contract until (1) the termination of negotiations for such contract; or (2) three months have elapsed from the date the contract is approved by the City elective officer."

P.J. Johnston, spokesman for Mayor Willie Brown, said he did not want to interpret the meaning of the law. "I think that there are some questions raised about the time of contributions when a contract is on the table and the city is trying to limit the impact of campaign contributions on the process," he said.

However, he added, the fact that people associated with both companies were making contributions undermines the suggestion that Airis was awarded the contract based on political influence.

Farrah, the Newsom aide, said campaign contributions don't buy influence with the mayor-elect.

"Over 10,000 people gave money from every district in San Francisco for this successful grassroots effort," Farrah said. "Mayor-elect Newsom campaigned on ethics and will run his administration with a standard that is unparalleled."

Under the contract approved by the Airport Commission but blocked at the Board of Supervisors, Airis would have built a 635,000-square-foot cargo complex and leased space to the airlines and other cargo handlers at SFO.

According to an estimate by Board of Supervisors budget analyst Harvey Rose, the deal could have generated more than $420 million in revenue over 30 years, with $258 million going to Airis and $162 million to the airport.

In addition to the campaign contributions and the teaming up with Brown's friend Jackson, both companies hired politically connected lobbyists and lawyers -- Airis tapped Robert McCarthy and AMB James Reuben -- all of which points up the high stakes at play at the airport and City Hall.

And the game isn't over.

On Tuesday, after the board rejected the contract award to Airis, Supervisor Dufty, who voted in favor of the deal, introduced a resolution urging the Airport Commission to return to the board with a new contract that addresses the supervisors concerns.

Latest from the SFGATE homepage:

Click below for the top news from around the Bay Area and beyond. Sign up for our newsletters to be the first to learn about breaking news and more. Go to 'Sign In' and 'Manage Profile' at the top of the page.